Market Roller Coaster Continues, Bring Your Barf Bags
The market today is best described as one of those horrible rides that does nothing but make you nauseous. By the end of the ride looking at all three major indices in the green was like slowly rolling back in the station and giving a big sigh of relief, “ahhhhh…..”
The NASDAQ Composite opened today down 64.67 points to 2227.60, or -2.82%. By 10:30 AM it had climbed up as high as 2278, shaving off over 2%, just to turn south again. By nearly 1:00 PM EST we were claiming new lows with the NASDAQ down a staggering 90 points! It was all up hill from there though, and by 4 PM closing bell we had finished up 1% to a close of 2316.41. All I can say is tomorrow make sure to take Dramamine before the day even begins.
So where does this leave us? Well, the bulls have looked to have taken control of the market at this point in time. But, who is to say we have hit rock bottom? The VIX is soaring and we are still seeing stocks like Apple (AAPL) get pounded after crummy earnings calls. With all the volatility we have seen lately, it wouldn’t surprised me to see the NASDAQ hit 2400 tomorrow. It is with days like today that I couldn’t be happier seeing my portfolio sitting in 100% cash.
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I did great on CAT today. I don’t think it can be held down for too long.
Blain and other readers, you may want to check this out…
http://en.wikipedia.org/wiki/Crash_of_1929
Here are some highlights (see if it sounds familiar):
“The roaring twenties was a time of prosperity and excess in the city, and, despite warnings of speculation, many believed that the market could sustain high price levels. Irving Fisher proclaimed shortly before the crash, “Stock prices have reached what looks like a permanently high plateau.”"
“In the days leading up to Black Thursday the market was unstable. Periods of panic selling and high volumes of trading were interspersed with brief periods of rising prices and recovery.”
“After an amazing five-year run that saw the Dow Jones Industrial Average (DJIA) increase in value fivefold, prices peaked at 381.17 on September 3, 1929. The market then fell sharply for a month, losing 17% of its value on the initial leg down. Prices then recovered more than half of the losses over the next week, only to turn back down immediately afterwards. The decline then accelerated into the so-called “Black Thursday”, October 24, 1929. A record number of 12.9 million shares were traded on that day.”
Sound Familiar?
(I tried to use html to bold the parts that are eerily similar to these past few trading days)
Here is my prediction. The markets (I’ll refer to S&P Index prices) will move up to the upper 1300s before the next Fed meeting. After the Fed announces their decision, markets tank.
Andy makes a good prediction. It is very likely that the markets will be disappointed after the Fed decision next week since they are counting on so much more. Early next week might be a good short.